Jan 2019 2 Minutes
Using Benchmarking To Add Value to Your Business
Benchmarking is a comparison of a business operation’s Key Performance Indicators (KPIs) and financial ratios with best practice and average performance data relating to similar businesses.
As you know, it’s very difficult for a small business operator to find authentic data against which to compare their performance to that of their peers, as this information is generally not known or released. It makes it very difficult for small/medium enterprise operators to know where they stand relative to:
- revenue generated per employee
- gross profit percentage per department
- labour to turnover percentage for each department
- net profit percentage to turnover for each department
- other performance data as compared to the overall industry performance figures
Benchmarking is important. Some people do it without realising that the task is called “benchmarking”. Many businesses look, compare and then change the way they do things. A good example of benchmarking outside of the business environment is sportspeople. They set and monitor their actual performance against “personal best” or national or world records and change part of their technique. They understand the importance of diet. They use the most efficient equipment possible. They visualise future performances. They then measure progress towards their targets, as these steps involve improving one aspect of their performance or technique, in an effort to improve overall performance.
Benchmarking can achieve the same results for your business and Walker Wayland have the tools to help you with your own business’ benchmarking.
If you would like to have a discussion relative to a benchmarking analysis on your business, please don’t hesitate to contact your accountant here at Walker Wayland.